SaaS: RightNow & the Extended Enterprise

I have written several pieces on the Enterprise 3.0 and the Extended Enterprise trend, covering aspects like Collaboration, CRM and PLM. While Salesforce.com is the undisputed leader in OnDemand CRM, Rightnow is attempting to become a challenger in the space.

RightNow Technologies (RNOW) provides on-demand customer service solutions. It has won many awards for its quality products including CRM magazine’s Service Leader in 2005, 2006, and 2007 as well as SearchCRM.com’s 2006 Product of the Year awards for Sales Force Automation in the Enterprise and Hosted Call Center.

RightNow has a host of CRM services designed to provide a rich customer experience. These include RightNow Sales, Retail, Service, and Marketing. Through these services, it provides each integral part of the CRM workflow with need-based access to relevant system data. Sales, Marketing, Customer Support Representatives are often outside the firewall. Call Centers are often outsourced. I therefore believe that RightNow aligns well with the Extended Enterprise trend. Its move to reinvent itself in the OnDemand, Software-as-a-Service mode will likely pay-off in the next 2 years.

In 2006, RightNow acquired Salesnet, Inc., a leading sales automation vendor. Salesnet won the 2003 TMS Labs Innovation Award for its Salesnet Extended product. With this acquisition, RightNow is positioned well to encompass a larger CRM portfolio. not just customer support, its genesis.

RightNow recorded revenues of $110.3 million in 2006, a 26.5% increase from the previous year. This was the company’s eighth straight year of growth.

In February 2007, the company realigned its business model to offer subscription based services rather than the software licensing model. This move hurt the company’s profitability in the short-term, but going ahead should result in more aggressive growth. It was a necessary step to take. The company’s total revenues for Q1 2007 were $27.5 million, a drop of 10.5% from Q1 2006. The company incurred a net loss of $6.0 million for Q1 2007.

The company’s stock was recently upgraded by analysts and is expected to touch $18 by the end of the year. The stock is currently trading around $15. If they execute right, the company certainly has the market wind in its sails.

This segment is a part in the series : SaaS